Osteoblasts, the cells that form bone, are mesenchymal in origin and like other mesenchymal lineages arise from pluripotential stem cells through a series of developmental transitions. The osteoblast developmental pathway is only partially understood, particularly in its early stages, where little is know about the cell fate decisions that lead to commitment to the osteoblast lineage. Adipocytes, the cells that produce fat, likely share a common early progenitor with osteoblasts, although little is known about the molecular control of this lineage bifurcation. Growing evidence indicates that transcription factors required for B lymphocyte development from hematopoietic stem cells are critical for proper skeletal development although as yet none have been implicated in osteoblast differentiation. We have discovered that Early B Cell Factor-1 (EBF-1), a transcription factor essential for B cell development, is expressed in osteoblasts and plays a critical role in controlling osteoblast development. EBF-1 deficient mice are runted, have increased bone formation parameters, and display a striking increase in numbers of osteoblasts. Remarkably, these mice also exhibit a dramatic expansion of adipocytes in the medullary canal of long bones. The central hypothesis underlying this proposal is that EBF-1 and its upstream regulatory and downstream target genes are critical for the control of osteoblast and adipocyte development. Our findings suggest that EBF-1 and EBF-1 deficient mice provide a unique opportunity to gain significant molecular insight into the development of these two lineages. The long-term goal of our work is to identify the mechanism(s) by which EBF-1 regulates osteogenesis and adipogenesis. The first step in achieving this goal is a careful analysis of the EBF-1 deficient mice at the histological, morphological, cellular, and molecular level, which will provide the information needed to formulate detailed molecular hypotheses for the role of EBF-1 in bone and fat cell development. Toward this end, we will pursue two Specific Aims: 1) To determine the bone phenotype of EBF-1 deficient mice;and 2) To characterize through a quantitative analysis the functional and molecular properties of EBF-1 deficient osteoblasts, osteoblast precursors, and adipocytes. We anticipate that these experiments will lead to new models for osteoblast development and hence for the potential to discover new anabolic pathways. Such information would be applicable to a wide variety of skeletal defects including age-related osteopenia, post-menopausal osteoporosis, fracture repair, and extended survival of prosthetic implants.